In This Article:
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Total Revenue: Increased 23% year-over-year to $22.4 million.
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Organic Revenue Growth: 5% excluding contributions from ALI and MC business units.
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Diluted EPS: $0.15; Adjusted diluted EPS: $0.31.
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Adjusted EBITDA: $6.6 million, representing 29% of revenue.
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Software Revenue Growth: 16%, with software representing 60% of total revenue.
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Services Revenue Growth: 34%, with services representing 40% of total revenue.
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Gross Margin: Total gross margin at 59%; Software gross margin at 81%; Services gross margin at 25%.
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Net Income: $3.1 million, 14% of revenue.
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Cash and Short-term Investments: $21.4 million, with no debt.
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Software Customer Renewal Rate: 90% based on fees, 84% based on accounts.
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Backlog: $20.4 million, up 18% quarter-over-quarter.
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Effective Tax Rate: 12% for the quarter, expected to be 21%-23% for the fiscal year.
Release Date: April 03, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Total revenue increased by 23% year-over-year, with a 5% organic growth excluding contributions from new business units.
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Software revenue grew by 16%, driven by strong performance in the Quantitative Systems Pharmacology (QSP) business unit, which saw an 89% revenue surge.
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The company maintained a high software customer renewal rate of 90% based on fees, indicating strong customer retention.
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Simulations Plus Inc (NASDAQ:SLP) ended the quarter with $21.4 million in cash and short-term investments, maintaining a strong financial position with no debt.
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The company reaffirmed its fiscal year 2025 guidance, expecting total revenue between $90 million to $93 million, indicating confidence in continued growth.
Negative Points
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Services revenue, although up 34%, was flat on an organic basis, with clients delaying project initiations to the second half of the year.
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Gross margin decreased to 59% from 72% in the prior-year quarter, primarily due to increased costs in software and services.
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Net income for the quarter decreased to $3.1 million from $4 million in the previous year, with diluted EPS dropping from $0.20 to $0.15.
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The renewal rate based on fees declined from 94% to 90%, impacted by a large customer renewal that was delayed until the third quarter.
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The operating environment remains challenging, with customers taking a cost-conscious approach to spending, affecting the pace of service project initiations.
Q & A Highlights
Q: Can you discuss the software organic revenue growth and the decline in the fee renewal rate to 90%? A: The software organic growth was 8% this quarter, excluding the Pro-ficiency software contribution. The renewal rate dropped to 90% due to one large account renewal that occurred shortly after the quarter ended. This was a significant renewal, impacting the fee-based renewal rate more than the account-based rate. - Shawn O'Connor, CEO